The Not for Profit sector, a model broken under its own weight

Recently, in my role as Chairman of Project for Change Limited, I received a letter from the Queensland Government, Department of Communities, Child Safety and Disability Services.

Project 4 Change Limited(P4C) is a community enterprise property developer which is self-funded and provides housing and support for all of those marginalised in our community.

We currently have a project at Ipswich which includes two high level disability units.

In conjunction with the community organisation which will run these units we made an application for a grant of $175k per unit.

P4C does not require government funding to carry out its work rather it seeks investment into its projects.In this case the operating organisation wanted to install some new high tech monitoring systems and asked us to apply for this grant, as the application had to come from the land owner.

The grant in question was the fourth and final round under the Elderly Carer Innovation Initiative. Originally there was approximately $16m to be delivered in the four rounds. There was a little over $3m left for the final round.The letter was to inform us that we had been unsuccessful, and that was fine.

What really hit home were the figures quoted in the letter. There had been 23 submissions including our two amounting in value to $47,119,957!That’s a little over $2.2m per submission when you take our two out.

Add on top of that the fact that most not for profits employ consultant grant writers, normally ex public servant’s familiar with the system, who charge between $10K-$15K per application. This equates to some $220-$330 k spent by these organisations in an attempt to obtain this grant.

What this highlights is that we can no longer expect government at any level to be the universal panacea for societies woes. How often do you hear “why isn’t the government doing something about this? And then when government suggests it needs to raise taxes to find more funds to “do something” we are then all up in arms.

What is required is a community change in attitude from the highest levels of business to the average person in the street to accept responsibility for our communities and take positive action ourselves.

I don’t believe we have developed into a society that doesn’t care, because I hear regularly comments along the lines of “I want to help but what can I do as one person?”

We need to embrace the Social Enterprise or as we prefer Community Enterprise model to really deliver the required services.No longer can we rely on the “pots of gold” in each capital city and Canberra to fund these community needs.

We, have addressed this by creating our own in-house Impact Investment fund to allow us to secure the equity required to start our projects and obtain construction funding from traditional sources. The returns to the investors as well as the interest to the institutions are real project costs and are repaid out of the profits of the project. The profits are also turned back in to pay for the support services that go with housing our clients.

Our investors are “Doing Good While Doing Well”, and engage in the feel good factor that is not present in traditional forms of investment.

Ours is but one model, which shows that this does work. This is the basis for many variations on this theme, in all services currently provided, in whatever form by the Not for Profit sector.This model also encourages cooperation and collaboration between organisations because they are not competing for the same public purse dollar.

We need to encourage investment from all areas of society into these programs and watch the significant change in the landscape of this sector.

We believe one way to accelerate this investment is to offer tax breaks to investors, be they individual or corporate, on the returns received from this form of investment. Obviously there would need to be oversight on the specific organisations, but this would also force accountability that is not there under the current grant systems.